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Berg Comments on IEM

A story about the University of Iowa's Iowa Electronic Markets quotes JOYCE BERG, a member of IEM's board of directors and an accounting professor at the UI's Henry B. Tippie College of Business -- inventor and custodian of the electronic market. "We ask you to think about not what you want to happen (in various elections), but what you think is going to happen," said Berg. "You make money here by buying low and selling high." IEM traders are predicting that about 54 percent of California voters will choose to recall Gov. Gray Davis (D), that actor Arnold Schwarzenegger (R) will get around 39 percent of the gubernatorial vote and that Lt. Gov. Cruz M. Bustamante (D) will get 32 percent. But the market has been running only since Aug. 27, and the differences are still wide between the buying prices bid on various outcomes ("contracts") and the selling prices asked for them. With more "traders" and more transactions, the differences between "bid" and "ask" will shrink. A version of the story also ran Sept. 8 on the website of the FORT WORTH STAR-TELEGRAM in Texas.

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